Exam 8: Stock Transactions, Dividends, and EPS

If Home Depot loses its dominance in the retail home improvement market and eventually becomes bankrupt, its preferred shareholders carry senior positions as claimants in bankruptcy vis-à-vis common shareholders.

On April 15, 2017, Maryhill, Inc. has 275,000 shares of $9 par value common stock issued and outstanding. The balance sheet reports account balances as follows (excerpts only): Common stock: $2,475,000 Paid in capital in excess of par value: 7,800,000 On June 2, the company splits its stock 3-for-2. a. How many shares of common stock are issued and outstanding immediately after the stock split? What is the par value of common stock after the split? b. What is the balance of common stock account immediately after the stock split? c. What is the balance in paid-in capital (in excess of par value) after the stock split?

Following is the stockholders' equity section of the 2017 balance sheet for Waitsburg Company: a. Compute the number of shares issued at May 31, 2017. b. At what average issue price were the shares issued? c. At what average cost were the treasury shares purchased?

When stock options are granted, the contributed capital increase is equal to the number of options granted multiplied by the estimated fair-value of the stock on the grant date.

Explain the accounting treatment difference between a large and a small stock dividend.

Which of the following should not be included in accumulated other comprehensive income?

Eugene Inc.'s statement of stockholders' equity on December 31, 2016 is as follows: The following transactions occurred during 2017: Feb 3 Issued 2,500 shares of preferred stock for $75 per share. Apr 25 Issued 50,000 shares of common stock for $15 per share. Jun 15 Repurchased 15,000 shares of common stock at $10.50 per share. Oct 24 Sold 7,500 shares of treasury stock bought on June 15 for $24 per share. Use the financial statement effects template, below, to record these transactions

Ennis, Inc. has 35,000 common shares issued at a $2.25 par value of which 22,000 are outstanding. If Ennis has no other outstanding stock, what size dividend must be paid such that each share receives $3.20?

Teton, Inc., reported a net gain of $41,400 on its foreign assets due to the weakening of the U.S. dollar in 2017. In the same year, the company disclosed gains of $958,800 on its derivatives and hedges and a $112,800 unrealized gain on its trading securities. The company also reported a $556,200 loss on the sale of some equipment. Which of the following best describes the impact of these transactions on Teton, Inc.'s accounts?

As of 2017, Buttle Corp. has $10 par, 2% preferred stock, 6,500 shares outstanding, and $1 par common stock with 32,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2014. If the company wants to distribute $4 per share to the common stockholders in 2017, what is the total amount of dividends that the company must pay at the end of the current year?

The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred shareholders before paying dividends to its common shareholders. This practice is called:

Why do some suggest that comprehensive income is a more inclusive measure of company performance?

The stockholders' equity of Crater, Inc. at December 31, 2016, appears below: During 2017, the following transactions occurred: May 10: Declared a 10% common stock dividend when market value was $50 per share August 31: Issued the stock dividend declared on June 15. December 10: Declared a cash dividend of $3.50 per share to be paid in January 2018. December 31: Recognized net income of $ 1,630,500. Compute the year-end balance of the retained earnings for 2017.

The stockholders' equity accounts of Petaluma, Inc. include the following at May 31, 2016: During 2017, the following transactions occurred: Feb 15 Declared and issued cash dividends of $4.50 per share May 31 Recorded an unrealized loss on foreign currency translation of $12,400. May 31 Recorded net income of $385,000 Calculate the year-ending balance of retained earnings for May 31, 2017.

On June 5, 2017, Lewiston, a tile manufacturer, repurchased 2,000 of its $0.75 par value common shares for $22.50 cash per share. On October 5, 2017, Lewiston reissues the 2,000 common shares for $40.50 cash per share. a. What is the change in the treasury stock account on June 5, 2017? b. On October 5, does Lewiston recognize a profit from the $18 per share increase in the stock's market value? c. What is the change in the treasury stock account as a result of the October 5, 2017 transaction? d. What is the change in the additional paid-in capital account as a result of the October 5, 2017 transaction?

During fiscal 2016, Abercrombie & Fitch reported the exercise of 2,000 shares at a weighted-average exercise price of $22.87. a. How much cash did Abercrombie & Fitch receive from this exercise? b. What was the impact to shareholders' equity as a result of this exercise?

Oracle reported the following earnings per share information in its 2016 Form 10-K (in millions except per share data). The company has only one class of stock outstanding. Compute basic and diluted earnings per share.

The following information is from 2016 statement of stockholders' equity for Dynegy, Inc. Dynegy has 420 million shares of common stock authorized. Assume the following transactions occurred during the 2017. Required: a. Use the financial statement effects template below to record the three transactions. b. How did the cash dividend affect the company's profitability for the year? c. What effects does the stock split have on Dynegy's financial statements? d. What effects does the stock split have on an individual stockholder?

What is a stock split? Why do firms split their stock?

The following is a summary of the stock option activity at NetFlix during 2016. Required: a. How many options did NetFlix grant to employees during the year? At what price may NetFlix employees buy shares in the future for options granted during 2016? b. How many options did employees exercise during the year? c. When employees exercised their options during 2016, how much cash did NetFlix receive? d. Assume that NetFlix granted options "at the money" during 2016. How much profit did employees make at exercise?